U.S. Home Foreclosures Jump More Than 21 Percent In Third Quarter

* New foreclosures jumped by 21 pct from 2nd qtr to 3rd qtr

* Increase due to banks picking up actions after pause-OCC

* New foreclosures fell 11.8 pct from 3rd qtr 2010 (Adds comment by OCC official, further detail)

By Dave Clarke

Dec 21 (Reuters) - The number of new U.S. homeforeclosures jumped by more than 21 percent in the third quarterfrom the second as banks moved more aggressively after a pauseto review how they deal with troubled borrowers, according to areport released by a bank regulator on Wednesday.

In the final months of 2010 some big lenders, including Bankof America Corp and Wells Fargo, suspendedforeclosure proceedings as they responded to criticism overshoddy paperwork used to support foreclosures.

With those reviews completed, the pace of foreclosures ispicking up.

The report, by the Office of the Comptroller of the Currency(OCC), said that the large increase in new foreclosures alsooccurred because banks have "exhausted alternatives toforeclosure for the large inventory of seriously delinquentmortgages working through" the system.

With both the economy and the housing market showing somesigns of improvement, the number of new foreclosures in thethird quarter was 11.8 percent less than a year ago.

An OCC official said the third quarter percentage increase brought the total number of new foreclosures back to thehistorically high level that is expected given the amount ofseriously delinquent loans in the system.

The number of new foreclosures in the third quarter was347,726, about the same as before some large banks hit the pausebutton on foreclosures beginning late last year.

Bruce Krueger, a mortgage official at the OCC, said heexpects the amount of new foreclosures to remain at or near thethird quarter level for at least the next few quarters.

"I think what you are seeing is what would be considered amore expected level, a more normalized level and I would expectthat to continue going forward so long as we have this pipelineof serious delinquent mortgages out there," Krueger toldreporters on a conference call.

The OCC defines a seriously delinquent mortgage as a loanthat is more than 60 days past due or a loan to a bankruptborrower that is more than 30 days past due.

Other data released this week shows the depressed housingsector starting to show signs of strength heading into 2012,with the strongest evidence coming from new housing starts forNovember.

An unexpected 9.3 percent gain to a 685,000 annual rate wasthe highest level of new-home construction in 19 months.Building permits issued for new houses and apartments climbed5.7 percent to a more than one-year high.

Sales of previously owned U.S. homes increased 4 percent inNovember, to an annual rate of 4.42 million units, althoughdownward revisions of data for the last four years showed thehousing market recession was deeper than previously thought,according to data released on Wednesday by the NationalAssociation of Realtors.

Wednesday's OCC report showed that the number of borrowersmaking mortgage payments on time in the third quarter remainedalmost unchanged from the previous quarter.

The OCC said that of the 32.4 million loans covered by thereport, 88 percent were considered current and performing.

The OCC Mortgage Metrics Report provides performance data onfirst-lien residential mortgages serviced by national banks andfederally regulated thrifts. The mortgages in this portfoliomake up 62 percent of all mortgages outstanding in the UnitedStates.

The slowdown in foreclosures earlier this year coincided withbanks coming under greater scrutiny both from state attorneysgeneral and federal regulators.

In April, several large banks entered into a settlement withthe OCC, the Federal Reserve and the now defunct Office ofThrift Supervision on steps to improve their foreclosureprocesses, such as providing borrowers with a single point ofcontact for questions.

States and the Justice Department are currently trying tonegotiate a settlement with Bank of America, JPMorgan Chase & Co, Citigroup Inc, Wells Fargo and Ally Financial. (Reporting By Dave Clarke and Margaret Chadbourn; Editing bySteve Orlofsky and Tim Dobbyn)